United Overseas Bank Limited · SGX:U11
United Overseas Bank — Debt Investor Presentation (March 2024)
53 slides from United Overseas Bank's debt investor presentation, March 2024
Slide 1: UOB Group: Resilient portfolio with diversified business drivers
UOB Group Resilient portfolio with diversified business drivers March 2024 Discla imer: The mater ial in th is presentat ion conta ins gener al b ackgro un d informat ion a bout Un ite d Oversea s Bank L im ite d (“UOB”) and its act ivit ies as at the d ate of the pre sentat ion. The informat ion is
Slide 2: 1. Overview of UOB Group
1. Overview of UOB Group 2
Slide 3: UOB Overview
UOB Overview Founding Key Statistics for FY23 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD321b (USD244b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD385b (USD292b1) grandfather of the present UOB Group CEO, Mr. Wee ■ Loan / Deposit ratio : 82.2% Ee Cheong. ■
Slide 4: A leading Singapore bank; established franchise in core market segments
A leading Singapore bank; Established franchise in core market segments Group Retail Group Wholesale Banking Global Markets Best Retail Bank in Singapore Best SME Bank in Singapore Strong player in Singapore dollar Strong player in credit cards and Seamless access to regional treasury inst
Slide 5: Proven track record of execution
Proven track record of execution UOB Group’s management has a proven track record in steering the Group through various global events and crises Stability of management team ensures consistent execution of strategies Disciplined management style which underpins the Group’s overall resilience a
Slide 6: Comprehensive regional banking franchise
Comprehensive regional banking franchise Extensive regional footprint FY23 performance by segment Myanmar 1 branch Greater China1 20 branches UOB SGD176b 3 Operating Assets under +14% Vietnam management YoY Thailand Open profit 147 branches 5 branches Malaysia Philippines Group SGD3.1b 2 AUM from 55
Slide 7: 2. Strong UOB Fundamentals
2. Strong UOB Fundamentals 7
Slide 8: Diversified loan portfolio
Housing loans Professionals and private 24% individuals Others 9% 6% Diversified loan portfolio Transport, storage and General commerce Industry communication 10% 4% FIs, investment and holding companies Building & 13% Manufacturing construction 7% 27% Large corporates and Others institutions 15% 55
Slide 9: Exposure to Greater China
Exposure to Greater China 69.2 70.5 71.6 71.7 72.5 9.4 10.5 11.3 10.7 9.7 Debt ($b) ~$2.2b in loans to Chinese Non Bank ($b) 49.8 49.2 48.6 51.6 51.2 developers (1% of group loans) Bank ($b) 10.9 11.3 9.5 9.2 12.6 Dec Mar Jun Sep Dec 2022 2023 As at 31 Dec 2023: Bank exposure ($9.0b) • ~35% of tot
Slide 10: Exposure to Commercial Real Estate - Office
Exposure to Commercial Real Estate - Office Commercial Real Estate - Office exposure is 7.5% of loans By geography as % of loans 0.3% • Almost half of office 0.8% Others exposure is in Singapore 0.8% 0.8% United Kingdom 0.8% 0.8% • Overseas exposure Dec-23 Group 1.5% 1.3% United States loans: 7.5% b
Slide 11: Singapore mortgages remain a low-risk asset class
Singapore mortgages remain a low-risk asset class Low risk of housing bubble due to cooling measures High national savings rate (1Q14 = 100) (% of GDP) CA,199 US,186 AU,170 SG, 39 HK,160 AU, 24 SG,134 HK, 23 CA, 22 US,16 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19 1Q20 1Q21 1Q22 1Q23 2018 2019 2020 2021 2022 2023
Slide 12: Strong investment grade credit ratings
Strong investment grade credit ratings Aa1 / P-1 A regular issuer in key debt capital markets globally Capital good by global standards GBP USD Additional Tier 1, Tier 2, 13% 20% Deposit-funded and liquid balance sheet SGD 7% 32% (BBB+; Baa1; BBB–)1 (A; A2; BBB+)1 13% Traditional banking prese
Slide 13: Why UOB?
Why UOB? Integrated regional Balance growth with Stable management Strong fundamentals platform stability Proven track record in Truly regional bank with full Strong Common Equity Tier Over 50% of Group’s steering the bank through ownership and control of 1 capital adequacy ratio of earnings
Slide 14: Appendix
Appendix A: Macroeconomic Outlook Appendix B: Sustainability Appendix Appendix C: Growth Drivers Appendix D: Latest Financials 14
Slide 15: Appendix A: Macroeconomic Outlook
Appendix A: Macroeconomic Outlook 15
Slide 16: ASEAN Economic Growth To Stay Resilient As External Trade Cycle Bottomed
ASEAN Economic Growth To Stay Resilient As External Trade Cycle Bottomed External Trade Cycle Has Likely Bottomed ASEAN6: Trade Performance (12-month moving average) 2022 GDP growth 2023 GDP growth +5.2 +4.5 40 2024F GDP growth +3.0 20 0 China +8.0 -20 +5.1 +6.0 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Ja
Slide 17: Fed to Begin Rate Cuts Mid-2024
Fed to Begin Rate Cuts Mid-2024 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24F 2Q24F 3Q24F 4Q24F US 10-Year Treasury 2.34 3.01 3.83 3.87 3.47 3.84 4.57 3.88 4.10 3.80 3.70 3.60 US Fed Funds 0.50 1.75 3.25 4.50 5.00 5.25 5.50 5.50 5.50 5.25 5.00 4.75 SG 3M SIBOR 0.79 1.91 3.17 4.25 4.19 4.09 4.06 SG 3
Slide 18: Macro resilience across key Southeast Asian markets
Macro resilience across key Southeast Asian markets Significantly Higher Foreign Reserves Improved Current Account Balances (USD billion) (% of GDP) 351 15.6 16.6 224 146 113 2.7 75 30 24 26 –0.2 –1.5 –0.3 –2.0 –5.5 Singapore Thailand Indonesia Malaysia Singapore Malaysia Thailand Indonesia Dec 1998
Slide 19: Singapore to implement Basel IV by mid-2024
Singapore to implement Basel IV5 by mid-2024 Year ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 ’24 ’25 ’26 ’27 Basel III Phased-in Full capital ratios IFRS 9 | Start LCR1 Phased-in Full NSFR2 | Start SACCR3 | Start date (pending) TLAC4 Phased-in Full Basel IV5 Phased-in -- MCRMR6 | Start -- Leverage
Slide 20: Impact of Basel IV likely to be manageable
Impact of Basel IV1 likely to be manageable Retail credit LGD2 floor of Retail Mortgage cut LGD2 and PD3 floors introduced for QRRE4 Wholesale credit to 5% from 10% and Other Retail Others Unsecured corporate FIRB5 LGD2 cut CCF6 for unconditional cancellable to 40% from 45% commitments raised to 10%
Slide 21: Basel III across the region
Basel III across the region BCBS Singapore Malaysia Thailand Indonesia Minimum CET1 CAR 4.5% 6.5%1 4.5% 4.5% 4.5% Minimum Tier 1 CAR 6.0% 8.0%1 6.0% 6.0% 6.0% Minimum Total CAR 8.0% 10.0%1 8.0% 8.5% 8.0% Capital Conservation Buffer 2.5% 2.5% 2.5% 2.5% 2.5% Countercyclical Buffer 2 n/a 0% 0% 0% 0% D-
Slide 22: Appendix B: Sustainability
Appendix B: Sustainability 22
Slide 23: UOB's responsible financing journey: pragmatic and progressive
UOB’s responsible financing journey: pragmatic and progressive Overview of UOB Group’s Responsible Financing Journey Establishing Improving Strengthening and Evolving 2015 - 2016 2017 - 2018 2019 - 2022 2023 • Launched the Group • Enhanced ESG monitoring • Announced our net zero commitment. • Develo
Slide 24: TCFD Implementation - Climate Scenario Analysis
TCFD Implementation - Climate Scenario Analysis Qualitative Transition Risk Transition Risk Scenario Physical Risk Pilot Analysis Improved Methodology Assessment Analysis Pilot 2019 2020 2021 2022-2023 • Completed qualitative • Partnered an internationally • Conducted a pilot physical risk • Develop
Slide 25: Net zero by 2050 commitment with a focus on 6 priority sectors
In October 2022, we announced our commitment to achieving net zero by 2050, with a focus on 6 priority sectors Energy Built environment Net zero targets and commitments for six sectors We focused on two significant, high-emitting ecosystems, energy and built environment, spanning 6 sectors based on:
Slide 26: Progressing across all priority sectors, at least 7% below reference pathways
One year on, we are progressing across all priority sectors, and are at least 7% below the reference pathways 26 ## RESTRICTED ##
Slide 27: Appendix C: Growth Drivers
Appendix C: Growth Drivers 27
Slide 28: Our growth drivers
Our growth drivers Realise full potential Sharpen regional Reinforce fee income Long-term growth of our integrated focus growth perspective platform Provides us with ability to Global macro environment Grow fee income to offset Disciplined approach in serve expanding regional remains uncerta
Slide 29: Southeast Asia's immense long-term potential
Southeast Asia’s immense long-term potential Population GDP1 Southeast Asia’s … that UOB is uniquely (Million persons) (USD trillion) immense growth placed to capture prospects… Most diverse regional Third largest population franchise among Singapore 667 726 6.3 banks 581 globally, after China a
Slide 30: Strong retail presence in high potential regional markets
Strong retail presence in high potential regional markets High Vietnam 8 2019 retail banking pool sizes 3 Philippines USD b Denotes UOB’s core markets in Southeast Asia Banking penetration Indonesia ✓ was launched growth potential ✓ in Thailand, Indonesia, Singapore and ✓ ✓ 12 Thailand 21 Malaysia.
Slide 31: Revenue potential from 'connecting the dots' in the region
Revenue potential from ‘connecting the dots’ in the region Industry’s potential connectivity revenue Industry’s potential connectivity revenue (2026) (SGD b) (SGD b) Markets where UOB has a presence c$79b CAGR c$23b c$59b +10% Singapore Thailand Vietnam c$4b c$1b c$2b c$15b c$13b +10% Malaysia Wealt
Slide 32: Scale acquisition with digital consumers
Scale Acquisition with Digital Consumers Scale UOB TMRW across ASEAN to digitally acquire at >8m Close to 1m Retail customers, New-to-bank customers • Tapping on rising low cost 76% are acquired in 2023 affluence and growing digitally enabled 514% YoY 53% digitally acquired digitalisation in Southea
Slide 33: Wholesale banking: strengthening connectivity
+9% Wholesale Strengthening Cross border income 1; customers Connectivity Formed 25% of GWB income +43% Across our ASEAN Suppliers and distributors within footprint and global • Growing regional network Financial Supply Chain Management (FSCM) solution 1 franchise, capturing Sector +13% cross-border
Slide 34: Appendix D: Latest Financials
Appendix D: Latest Financials 34
Slide 35: Disciplined balance sheet management
Disciplined balance sheet management Return on risk-weighted assets Focus on Healthy 1.90% 1.83%1 2.29%1 1.27% 1.68% balance sheet portfolio FY19 FY20 FY21 FY22 FY23 efficiency quality Current Account Saving Account Balances (SGD b) 7.5% CAGR2 174 198 175 189 141 Proactive Robust liability FY19 FY20
Slide 36: Comparison against peers
Comparison against peers Standalone Cost Returns Liquidity Strength Management Moody’s baseline Costs/income Return on average Loan/deposit Moody’s S&P Fitch credit assessment ratio assets (annualised) ratio Aa1 AA– AA– UOB a1 42%1 1.2%1 82% Aa1 AA– AA– OCBC a1 39% 1.5% 81% 1 1 Aa1 AA– AA– DBS a1 40
Slide 37: Capital and leverage ratios
Capital and leverage ratios Reported Common Equity Tier 1 CAR 15.9% 15.3% 14.8% 14.6% 14.5% 14.5% 14.4% 14.1% 13.4% 13.4% 13.3% 12.3% 12.2% 2 2 OCBC MBB HSBC DBS RBC CIMB TD SCB UOB BOA Citi CBA NAB Return on Average Equity 1 (annualised) 13.7% 10.8% 13.6% 18.0% 1 14.3% 10.7% 14.4% 10.1% 14.2% 9.8%
Slide 38: 4Q23 financial overview
4Q23 financial overview Core Net Profit After Tax Movement, 4Q23 vs 3Q23 (SGD m) 26 22 2 57 1 84 2 36 1 1,479 1,498 1 +1% –1% –4% +0% +4% –36% +11% –10% 3Q23 core net Net interest Net fee and Other non- Operating Total Share of profit Tax, 4Q23 core net profit after tax income commission interest ex
Slide 39: FY23 financial overview
FY23 financial overview Core Net Profit After Tax Movement, FY23 vs FY22 (SGD m) 930 762 1 1,336 92 318 5 31 1 1 +26% 6,060 4,819 +16% +4% +85% +15% +53% –5% +3% FY22 core net Net interest Net fee and Other non- Operating Total Share of profit Tax, FY23 core net profit after tax income commission in
Slide 40: FY23 Performance by Geography
FY23 Performance by Geography 2023 2022 YoY 4Q23 3Q23 QoQ (1) Core operating profit $m $m +/(-)% $m $m +/(-)% • Performance improved Singapore ASEAN-4 4,657 1,770 3,824 1,419 22 25 1,052 470 1,188 389 (11) 21 across most markets Malaysia 873 744 17 277 184 51 Thailand 700 425 64 163 173 (6) • ASEAN-
Slide 41: Net Interest Income and Margin
2.60 2.75 Net Interest Income and 2.26 2.61 2.62 2.64 2.55 Margin 2.09 2.22 1.86 2.14 2.12 2.09 2.02 • Higher NII and NIM YoY 0.91 1.02 1.02 1.11 1.10 0.93 0.94 from higher interest rate environment 9,679 8,343 1,529 • 4Q23 NIM moderated to 1,203 2.02% mainly from loan 2,560 2,409 2,437 2,429 2,404
Slide 42: Fee Income
Fee Income 19 16 17 17 15 16 15 • 4Q23 credit card fees continued strong 2,235 2,143 momentum to register a 307 318 new high, boosted by 382 higher card spending on 231 591 552 569 an enlarged regional 524 72 74 573 485 77 franchise 595 78 83 104 81 125 72 74 • Wealth fees saw modest 125 156 142 146
Slide 43: Trading & Investment Income
85 87 Trading & Investment 53 51 Income 45 43 38 • Customer-related treasury 1,690 income sustained momentum 924 • Trading and liquidity 474 478 management activities 829 375 362 continued to deliver good 128 272 296 performance 203 177 178 701 766 26 177 202 182 198 184 2022 2023 4Q 1Q 2Q 3Q 4Q 202
Slide 44: Core Expenses and Cost / Income Ratio
43.3 Core Expenses and Cost / 41.5 46.8 45.2 Income Ratio (1) 43.3 44.1 44.4 5,778 42.6 43.2 40.9 40.9 41.0 • FY23 CIR improved to 5,016 1,365 + 9% 41.5% on the back of 1,255 + 18% strong income growth 905 1,440 1,448 1,473 1,418 1,416 and disciplined 770 347 363 357 351 310 spending 230 233 220 221
Slide 45: Non-Performing Assets
2022 2023 Non-Performing ($m) 4Q 1Q 2Q 3Q 4Q Assets NPAs at start of period 5,037 5,127 5,150 5,192 5,011 Non-individuals • Stable asset quality with New NPAs _ 395 301 364 267 389 NPL ratio at 1.5%. New Less: NPA formation more Upgrades and recoveries 322 80 137 298 288 than offset by Write-offs 12
Slide 46: Total Allowance on Loans
22 25 31 30 29 25 26 Total Allowance on Loans 25 20 26 25 21 21 19 • FY23 credit costs at 25bps 784 were within expectation 628 173 238 151 202 807 192 36 694 28 253 229 202 212 164 (66) (24) (9) (80) (78) 2022 2023 4Q 1Q 2Q 3Q 4Q 2022 2023 Credit costs on loans - Specific (basis points) General all
Slide 47: Allowance Coverage
34 34 33 32 Allowance Coverage 32 0.9 1.0 1.0 0.9 0.9 • Reserve buffer remained adequate with prudent 5,002 4,931 5,134 5,109 4,976 379 379 coverage for performing 379 379 379 loans at 0.9% 2,868 2,905 3,058 3,042 3,007 • Sound NPA coverage at 101% or 209% taking 1,755 1,647 1,697 1,688 1,590 collat
Slide 48: Gross Loans
Gross Loans Dec-23 Sep-23 Dec-22 QoQ YoY $b $b $b +/(-)% +/(-)% • Loans grew 1% QoQ and Singapore 158 155 160 2 (2) 2% YoY on constant ASEAN-4 69 67 69 3 1 currency basis Malaysia 32 32 33 (1) (5) Thailand 25 24 23 7 8 Indonesia 10 10 10 2 (4) Vietnam 2 2 2 7 31 North Asia 54 56 52 (3) 4 Greater Chi
Slide 49: Total Funding
Total Funding Dec-23 Sep-23 Dec-22 QoQ YoY $b $b $b +/(-)% +/(-)% Singapore 264 262 249 1 6 • Customer deposits up ASEAN-4 73 72 71 2 3 1% QoQ and 5% YoY, Malaysia 34 34 34 0 1 alongside improved Thailand 27 26 26 5 4 CASA ratio at 48.9% Indonesia 10 10 10 3 4 Vietnam 2 2 1 (8) 49 North Asia 24 25 2
Slide 50: Liquidity Ratios
167 Liquidity Ratios 154 153 157 147 • Liquidity remained ample with LCR at 157% 121 121 121 and NSFR at 120% 116 120 85.6 83.3 83.5 82.3 82.2 Dec Mar Jun Sep Dec 2022 2023 USD LDR (%) 60.0 60.7 62.9 60.7 56.5 All-currency LCR (%) Loan/Deposit Ratio (LDR) (%) Net Stable Fund Ratio (NSFR) (%) 50
Slide 51: Capital
13.3 14.0 13.6 13.0 13.4 Capital • Healthy CET1 ratio at 263 272 276 259 258 13.4% Dec Mar Jun Sep Dec 2022 2023 Leverage ratio (%) 6.6 7.0 7.0 6.8 6.9 RWA ($b) CET1 ratio (%) 51
Slide 52: Dividends
170 Dividends 135 120 85 • Committed to consistent and Net dividend 75 Per ordinary share (¢) 60 sustainable returns to 78 shareholders Interim Final 39 • 85 Proposed final 60 60 dividend of 85 cents 39 per share 2020 2021 2022 2023 Payout amount ($m) 1,304 2,011 2,263 2,844 Payout ratio (%) 45 ^ 49
Slide 53: Right By You
Right By You
United Overseas Bank — Debt Investor Presentation (March 2024) on 6ix